Waiters, Inc. has been manufacturing 10,000 units of part 2050 per month, which is used in manufacturing one of its products. At this level of production, the cost per unit to manufacture part 2050 follows:
Direct materials $10.00
Direct labor 25.00
Variable overhead 13.00
Fixed overhead 12.00
Total $60.00
Westbrook Company has offered the sell Waiters 10,000 units of part 2050 for $55 a unit. Waiters has determined that it could use the facilities presently used to manufacture part 2050 to manufacture produce RAC, which would generate an additional contribution margin per month of $50,000. Waiters also has determined that one-third of the fixed overhead will be incurred even if it purchases part 2050 from Westbrook and makes product RAC.
Required:
Determine whether or not Waiters should purchase from Westbrook. Assume that Waiters would take the opportunity to make product RAC.
In: Accounting
Goran Grill Company makes a single product - a handmade specialty barbeque grill that sells for $600. Data for last year’s operations follow:
Units in beginning inventory 0
Units produced 50,000
Units sold 40,000
Variable costs per unit:
Direct materials $ 150
Direct labor 120
Variable manufacturing overhead 100
Variable selling and administrative 30
Total variable cost per unit $ 400
Fixed costs:
Fixed manufacturing overhead $1,500,000
Fixed selling and administrative 600,000
Total fixed costs $2,100,000
Required:
In: Accounting
Struggling with the bolded questions
Matt Holmes recently joined Klax Company as a staff accountant in the controller's office. Klax Company provides warehousing services for companies in several midwestern cities.
The location in Dubuque, Iowa, has not been performing well due to increased competition and the loss of several customers that have recently gone out of business. Matt's department manager suspects that the plant and equipment may be impaired and wonders whether those assets should be written down. Given the company's prior success, this issue has never arisen in the past, and Matt has been asked to conduct some research on this issue.
Instructions
If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses.
a.
What is the authoritative guidance for asset impairments? Briefly discuss the scope of the standard (i.e., explain the types of transactions to which the standard applies).
360-10-05-4 shows that the authoritative guidance for asset impairments provides guidance for :
-recognition and measurement of the impairment of long-lived assets to be held and used.
-measurements of the long lived-asset to be disposed of by sale
-disclosures about the impairment or disposal of long lived assets and disposals of individually significant components of an entity
b.
Give several examples of events that would cause an asset to be tested for impairment. Does it appear that Klax should perform an impairment test? Explain.
We can find the reasons that an asset would be tested for impairment in 360-10-35-21. They can be tested if:
-there is a large decrease in the market price of the long-lived asset
- if there is a big adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.
- A large adverse change in legal factors or in the business climate that could affect the value of a long-lived asset , including an adverse action or assessment by a regulator
- An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset
- current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset
- A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
c.
What is the best evidence of fair value? Describe alternate methods of estimating fair value.
The best evidence of fair value can be found in 360-10-35-36. This states that long-lived assets that are similar in uncertainties dealing with timing amount, an expected present value technique is typically the appropriate technique to estimate fair value.
In: Accounting
Menlo Company distributes a single product. The company’s sales and expenses for last month follow:
Total | Per Unit | |||||
Sales | $ | 302,000 | $ | 20 | ||
Variable expenses | 211,400 | 14 | ||||
Contribution margin | 90,600 | $ | 6 | |||
Fixed expenses | 75,600 | |||||
Net operating income | $ | 15,000 | ||||
Required:
1. What is the monthly break-even point in unit sales and in dollar sales?
2. Without resorting to computations, what is the total contribution margin at the break-even point?
3-a. How many units would have to be sold each month to attain a target profit of $31,800?
3-b. Verify your answer by preparing a contribution format income statement at the target sales level.
4. Refer to the original data. Compute the company's margin of safety in both dollar and percentage terms.
5. What is the company’s CM ratio? If sales increase by $90,000 per month and there is no change in fixed expenses, by how much would you expect monthly net operating income to increase?
In: Accounting
What compensation plans are employed by Yum Brands! Inc,? Do you feel these roles play a strategic role in the success or failure of the company?
In: Accounting
Use the May 31 fiscal year-end information from the following
ledger accounts (assume that all accounts have normal
balances).
General Ledger | |||||||||||
M. Muncel, Capital | Acct. No. 301 | Salaries Expense | Acct. No. 622 | ||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | ||
May 31 | G2 | 83,000 | May 31 | G2 | 41,500 | ||||||
M. Muncel, Withdrawals | Acct. No. 302 | Insurance Expense | Acct. No. 637 | ||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | ||
May 31 | G2 | 48,000 | May 31 | G2 | 3,900 | ||||||
Services Revenue | Acct. No. 401 | Rent Expense | Acct. No. 640 | ||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | ||
May 31 | G2 | 146,246 | May 31 | G2 | 8,400 | ||||||
Depreciation Expense | Acct. No. 603 | Income Summary | Acct. No. 901 | ||||||||
Date | PR | Debit | Credit | Balance | Date | PR | Debit | Credit | Balance | ||
May 31 | G2 | 15,000 | |||||||||
1. Prepare closing journal entries from the above
ledger accounts.
2. Post the entries from Requirement 1 to the
General Ledger accounts below. Use the transaction number from
Requirement 1 as the date.
In: Accounting
The Justice Corporation mass produces wooden chairs. The standard costs follow:
Plastic 10 pounds at $4.50 per pound.
Molding 3 feet at $3.00 per foot.
Direct labor 4 hours at $15.00 per hour.
Variable overhead $3 per direct labor hour.
Fixed overhead $.75 per direct labor hour.
The static budget called for 80,000 direct labor hours in June.
Transactions during June follow:
Required:
In: Accounting
Select the relevant costs and other data from the following, | ||
and calculate the All Source F&D Cost for Big Oil Co. on a BOE basis | ||
(Use a 6 to 1 conversion ratio) | ||
Big Oil Data for All Source F&D Calculation - Oil and Gas | ||
Costs | $Millions | |
Unproved property acquisitions | $75 | |
Exploration | $850 | |
Development expenses | $900 | |
Proved Property Acquisitions | $250 | |
SG&A | $225 | |
Interest payments | $75 | |
Oil Reserve Additions | Million Barrels | |
Oil reserve discoveries and extensions | 105 | MMBO |
Oil revisions | 5 | MMBO |
Acquisitions | 10 | MMBO |
Gas Reserve Additions | Bcf | |
Gas discoveries | 165 | Bcf |
Gas revisions | 5 | Bcf |
Acquisitions | 30 | Bcf |
In: Accounting
What goals are attempted to be accomplished by the presentation of the cash flow statement to investors?
Discuss how the format of the Cash flow statement may have contributed towards meeting its objectives.
In: Accounting
Identify the following as an asset, liability, or equity by writing the letter of the correct classification in the space provided.
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In: Accounting
Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.6 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $63,810 for 7,090 units of direct materials in the production of 2,175 pairs of shoes.
Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance
A variance that occurs when the actual cost is less than standard cost.
, and a positive number for an unfavorable cost variance
A variance that occurs when the actual cost exceeds the standard cost.
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Actual Cost | Standard Cost | |||||||||
Actual Quantity | X | Actual Price | Actual Quantity | X | Standard Price | Standard Quantity | X | Standard Price | ||
X | X | |||||||||
= | = | = | ||||||||
selector 1Unfavorable
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selector 3Favorable
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selector 5Favorable
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You are in Column Actual Cost | You are in Column Actual Cost | You are in Column Actual Cost | You are in Column Standard Cost | You are in Column Standard Cost | You are in Column Standard Cost |
Points:
Feedback
Check My Work
Explanation
none
X
Direct Labor
Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.8 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $65,340 for 7,260 hours of direct labor in the production of 2,100 pairs of shoes.
Complete the following table, showing the direct labor variance relationships for August for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable variance, and a positive number for an unfavorable variance.
Actual Cost | Standard Cost | |||||||||
Actual Hours | X | Actual Rate | Actual Hours | X | Standard Rate | Standard Hours | X | Standard Rate | ||
X | X | |||||||||
= | = | = | ||||||||
selector 1
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selector 3
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selector 5
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You are in Column Actual Cost |
You are in Column Actual Cost | You are in Column Actual Cost |
In: Accounting
The following units and costs of lawnmower Model 200 were available for sale during the year for Craftsman Hardware:
Beginning inventory …………….. |
10 units at $130 |
First purchase …………………… |
15 units at $135 |
Second purchase ……………….. |
30 units at $140 |
Third purchase …………………… |
20 units at $145 |
Craftsman has 35 units on hand at the end of the year. What is the dollar amount of cost of goods sold for the year according to the first-in, first-out method?
In: Accounting
Prepare journal entries to record the following merchandising
transactions of Cabela’s, which uses the perpetual inventory system
and the gross method. (Hint: It will help to identify each
receivable and payable; for example, record the purchase on July 1
in Accounts Payable—Boden.)
July | 1 | Purchased merchandise from Boden Company for $6,900 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1. | ||
2 | Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $575. | |||
3 | Paid $135 cash for freight charges on the purchase of July 1. | |||
8 | Sold merchandise that had cost $2,200 for $2,600 cash. | |||
9 | Purchased merchandise from Leight Co. for $2,500 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9. | |||
11 | Received a $500 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9. | |||
12 | Received the balance due from Creek Co. for the invoice dated July 2, net of the discount. | |||
16 | Paid the balance due to Boden Company within the discount period. | |||
19 | Sold merchandise that cost $1,000 to Art Co. for $1,500 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. | |||
21 | Issued a $250 credit memorandum to Art Co. for an allowance on goods sold on July 19. | |||
24 | Paid Leight Co. the balance due, net of discount. | |||
30 | Received the balance due from Art Co. for the invoice dated July 19, net of discount. | |||
31 | Sold merchandise that cost $5,700 to Creek Co. for $6,800 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31. |
In: Accounting
You are part of a team responsible for implementing an activity-based costing system. Some of the members do not understand the steps involved in implementing such a system. Prepare a summary showing your team members the steps involved and a brief description of each step that are completed in the process.
In: Accounting
INDIANA CORPORATION
…… is a bakery that is known for its strawberry cheesecake. It also makes 12 different kinds of cheesecake as well as many other types of bakery items. The company uses normal costing with direct-labor dollars as their base for allocating overhead to its various bakery products.
The company estimates overhead for the upcoming year of $421,000 and estimates direct labor of $2,000,000.
The following estimated information is available for their Strawberry Cheesecake product:
Annual production |
17,500 units |
Direct materials per unit |
$6 |
Direct labor per unit |
$2 |
Required:
NOW consider the following additional information about the estimated overhead of $421,000. You have analyzed this amount, and determined that the following breakdown and have identified appropriate activities that appear to cause, or drive these costs, as follows:
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ASSUME that the following amounts of various cost drivers will be used for all products and for the Strawberry Cheesecake product:
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In: Accounting